The Present State of The State of Governance in Sweden

A COUNTERPOINT on the image of Norden
(the Nordic countries), in response to “Scandinavia: Model management. Swedish business is being cast as a model for long-term stability and growth”, and, to “Swedish prime minister Fredrik Reinfeldt. The Swedish prime minister on budgets, basketball and the Eurovision song contest,” published in Financial Times (FT), on 20 March and on 15 March 2013, respectively.

Richard Milne of Financial Times reveals many secrets of "the Swedish model of active ownership" but fails to explain with critical acumen the crucial structure in the social and legal construct responsible for the relative economic success. Shareholders exercise strategic power by their majority votes in the large foundations whose assets consist of shares in holding companies. Therefore, ownership control is protected and foundations also provide a convenient tax shelter for profits which need to be reinvested with a much longer-term vista than otherwise possible. A major part of the shares of Sweden's industrial gems are in this way protected from the daily vagaries of stock markets.

Despite these conditions at hand, Swedish industry lost its two largest pharmaceutical industries, Astra AB and Pharmacia, both stars on its corporate firmament. The model of foundation-owned holdings does little to protect against competence mismatch. But Sweden can learn from a different competence culture in Denmark and Switzerland. These countries of comparable size and status are capable of providing fertile arenas for their life sciences industry and of offering favorable infrastructure in support of developing both “big pharma” and novel biotech start-ups.

However, the retention of owner control across generations does not itself warrant a steady growth of value in a fast-changing environment during cycles of crises. This suggests that the creation of an efficient strategy for solid corporate and societal growth may depend on the level of competence in the hands of skilled stakeholders of at least five categories. Their specific qualifications are key factors in the chain of decision-making and successful leadership:

(1) Regulators must understand how foundation laws provide a framework for an alliance between private and public interest.

(3) Management focused on exploiting strategic business advantage—and ensuring viability of its growth model in a volatile business climate—must know how to navigate between the frames set by the owners at the boards and many self-evident responsibilities towards society.

(4) Activist funds of various colors provide risk capital and offer important vitalization of operative opportunities to capture value through upcoming advantages on a trajectory towards sustainable growth. Finally,

(5) Beneficiaries of the foundation grants reinvested from the profits (among whom we find leaders of frontier science organizations in a developing knowledge infrastructure), are expected to deliver sufficient momentum at the precise interface between research and innovation to enable future industrial progress. Even in view of present relative success, the chosen strategic path looks severely suboptimal in the context of global foresight.

GOVERNANCE OF THE STATE

When it comes to the political leadership a few notes in our counterpoint may be relevant to the future state of our state:

Past success in the management of the debt crisis that Sweden overcame in the 90s does not save the country from facing a range of present problems. The current challenge is to translate a futurist analysis recently delivered by a governmental commission (Framtidskommissionen) into actionable strategy. It becomes more urgent to bridge the gap between analytical fact, values, prospects, and scenarios on one hand and policies that cater to the real needs of people on the other, especially in view of the urgent need to capture obvious future opportunities.

Although Sweden is often counted among top performers in country rankings of "innovativeness" the need for the nation to create incitement for growth, and implement results from its research investment, is a pressing challenge. As for any real challenge it requires considerable competence in strategic cognition. It appears to be a problem of the present governance to rely more on public relations consultants and political advisors than on those who are really capable of delivering an urgent state-of-the-art in-depth analysis.

There is currently a disappointment voiced among public opinion in the face of the anorectic ideas of politicians and the stalemate of creative processes aimed at devising effective remedies for key problems. Political programs need to address, handle and target the precise problems that occupy the minds of the Swedes, such as the quality and efficiency of public health care, youth unemployment and psychosocial health, worrying signs of public corruption, and questionable allocation of public funds to extravagant projects (Nya Karolinska) without due diligence or sufficient critical review of the options at hand in advance of final decision.

Political dangers may erupt from a calm surface—and the political burden of an over-contented bureaucracy may well be perceived as a threat to the political peace, the core stabilizing constituent of the iconic mid-way between capitalism and socialism. Not even a brilliant power player can afford to play with fire and risk disrupting the ingrained paradise vision of the iconic People´s Home (Folkhemmet), without risking unpleasant repercussions. Misinterpretation always results in loss of previous excellence in performance. This is a sobering insight in the arts and in business, in science as well as in society.

These and other similar clusters of problems are by no means unmanageable. And strategic options are at hand. But the analytical acumen required to evaluate the long-term outcome of preferred options is not entirely convincing for the moment.

Therefore, the government has lost some of its credibility and trust—and opinions are polarizing towards both extremes of the political spectrum. A sense of urgency is intensely felt despite the comparative wealth and stability of the nation.

Qualified citizens expect to see competent and energetic solutions to real problems. Confidence in government may quickly regain once tangible and concrete results become visible.

To conclude: People look forward to seeing leaders overcome anemic paralysis by means of a concerted and well-grounded strategic action.

That is the real song contest to win.

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